Surge in UK media M&A in Q1 2011

The UK media market saw a healthy start to the year as Mergers and Acquisitions activity surged in the first quarter, according to leading financial and business advisors Grant Thornton UK LLP.

The firm’s M&A tracker reveals that the number of announced deals across the media sector in Q1 doubled compared to the same time last year – from 35 in Q1 2010 to 67 in the first quarter of 2011. Total deal values (disclosed) also shot up, reaching £3.5 billion this quarter, compared to the £235 million (€265m) the sector mustered up in Q1 2010.

Bouncing back from a quiet end of last year, the M&A sector saw the most activity with 32 deals announced during the quarter. Traditionally a smaller-size deals segment, transactions in this sub-market still only totalled a fairly modest disclosed £45 million.

The Publishing sub-sector also had a strong first quarter. While the number of deals in this segment stayed stable on the previous quarter at 24, total values in this space were up five-fold from £157 million in Q4 2010 to £800 million this quarter.

Dominic Bolton, Media Corporate Finance Partner at Grant Thornton, said: “M&A activity has truly made a return to the media sector, with total cross-sector values up on both the previous quarter and the same time last year. We are not back to the heady days of 2007, but the figures are tremendously encouraging, particularly compared to 2010 when activity rebounded strongly from the lows we saw in 2009 and have been steadily increasing quarter by quarter throughout the year.

“Even excluding the EMI debt for equity swap (£2.2bn) and the newly announced familial tie up between Shine and News Corp (£415m), values were close to five times more than the Q1 2010 equivalent.”

“There is a particularly strong appetite to do deals in the Advertising & Marketing space, which saw a flurry of activity this quarter after a fairly quiet quarter in Q4 2010. This could partly be explained by the fact that we have seen a desire by some groups to expand their social media and digital skillset, and others, their geographical footprint. The usual suspects, such as WPP, have been actively acquiring foreign entities.”

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